ABSTRACT: This paper examines the impact of domestic codesharing alliances on airfares. Our analysis
yields two novel and somewhat surprising findings that have yet to be documented in the
literature. First, unlike international codesharing, we find that the overwhelming majority of
domestic codeshare itineraries involve a single operating carrier, a phenomenon that we refer to
as “virtual” codesharing. Second, we find that these virtual codesharing itineraries are priced
lower than itineraries operated and marketed by a single carrier in the same market. We suggest
that carriers may be using virtual codesharing—in large part—as a “generic” product to compete
for the most price sensitive passengers.